Kerala High Court
R. Dinesan vs State Of Kerala on 29 February, 2024
Author: Amit Rawal
Bench: Amit Rawal
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE AMIT RAWAL
&
THE HONOURABLE MRS. JUSTICE C.S. SUDHA
THURSDAY, THE 29TH DAY OF FEBRUARY 2024 / 10TH PHALGUNA, 1945
WA NO. 595 OF 2021
AGAINST THE JUDGMENT IN WP(C) NO.20911 OF 2018 OF HIGH COURT OF KERALA
APPELLANTS/PETITIONERS:
1 PAZHAKULAM SIVADASAN
AGED 56 YEARS
THADATHIL,MELOOD.P.O, PAZHAKULAM, PATHANAMTHITTA
DISTRICT,PIN CODE-691554.
2 A.REGHU KUMAR,
VIJAYA BHAVANAM,MELOOD.P.O, PAZHAKULAM, PATHANAMTHITTA
DISTRICT,PIN CODE-691554.
3 MB JAYAN,
THONDUKANDATHIL KIZHAKKEKKARA,MELOOD.P.O,
PAZHAKULAM,PATHANAMTHITTA DISTRICT,PIN CODE-691554.
4 JOGINDAR.G,
KURAKKONATHU THARAYIL PUTHAN VEEDU, MELOOD.P.O, PAZHAKULAM,
PATHANAMTHITTA DISTRICT,PIN CODE-691554.
5 K.SARADAMMA,
MUKALAYYATHU,PAZHAKULAM.P.O, PATHANAMTHITTA DISTRICT,PIN
CODE-691527.
6 SR SANTHOSH,
SANTHOSH BHAVANAM,MELOOD.P.O, PAZHAKULAM.P.O, PATHANAMTHITTA
DISTRICT,PIN CODE-691527.
7 BINOY VIJAYAN,
SANTHALAYAM,MELOOD.P.O,PAZHAKULAM, PATHANAMTHITTA
DISTRICT,PIN CODE-691554.
8 KURIAN KOSHY,
KALATHOOR MELETHIL,AMMAKANDAKARA, ADOOR.P.O,PATHANAMTHITTA
DISTRICT, PIN CODE-691523.
9 JOSE PERINGANADU,
KALLUVILAYIL PUTHAN VEEDU,MELOOD.P.O,
PAZHAKULAM,PATHANAMTHITTA DISTRICT, PIN CODE-691554.
BY ADVS.
GEORGE POONTHOTTAM (SR.)
WA NO. 595 OF 2021 and conctd. case
2
SMT.NISHA GEORGE
RESPONDENTS/RESPONDENTS:
1 THE STATE OF KERALA
REPRESENTED BY THE PRINCIPAL SECRETARY TO
GOVERNMENT,DEPARTMENT OF CO-OPERATION, GOVERNMENT
SECRETARIAT,THIRUVANANTHAPURAM, PIN CODE-695001.
2 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES(GENERAL),
OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE
SOCIETIES(GENERAL),PATHANAMTHITTA DISTRICT, PIN CODE-
689645.
3 THE ASSISTANT REGISTRAR OF CO-OPERATIVE
SOCIETIES(GENERAL),
(INSPECTING OFFICER APPOINTED UNDER SECTION 66 AND 68 OF
THE KCS ACT),OFFICE OF THE ASSISTANT REGISTRAR OF CO-
OPERATIVE SOCIETIES(GENERAL),ADOOR,PATHANAMTHITTA
DISTRICT,PIN-691523.
4 THE PAZHAKULAM SERVICE CO-OPERATIVE BANK LTD.,
NO.PT 64,PAZHAKULAM,PATHANAMTHITTA DISTRICT,REPRESENTED
BY ITS SECRETARY.
5 R.KALESAN,
S/O RAGHAVAKURUP(LATE),KALLELIL VADAKKETHIL,PAZHAKULAM
PERINGANADU VILLAGE,ADOOR TALUK,PATHANAMTHITTA DISTRICT-
691554.
BY ADVS.
K.SHAJ
JOHN CHERIAN
K.JAJU BABU (SR.)(K/116/1981)
THIS WRIT APPEAL HAVING COME UP FOR HEARING ON 15.2.2024,
ALONG WITH WA.1070/2021, THE COURT ON 29.02.2024 DELIVERED THE
FOLLOWING:
WA NO. 595 OF 2021 and conctd. case
3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE AMIT RAWAL
&
THE HONOURABLE MRS. JUSTICE C.S. SUDHA
THURSDAY, THE 29TH DAY OF FEBRUARY 2024 / 10TH PHALGUNA, 1945
WA NO. 1070 OF 2021
AGAINST THE JUDGMENT IN WP(C) NO.22340 OF 2018 OF HIGH COURT OF KERALA
APPELLANT/PETITIONER:
R. DINESAN
AGED 62 YEARS
PALAZHI VEEDU, PAZHAKULAM P.O., ADOOR, PATHANAMTHITTA DISTRICT
(FORMER SECRETARY (RETIRED), PAZHAKULAM SERVICE CO-OPERATIVE
BANK LTD., NO.PT 64, PAZHAKULAM, MELOODU P.O., ADOOR,
PATHANAMTHITTA DISTRICT.
BY ADVS.
K.SASIKUMAR
S.ARAVIND
P.S.RAGHUKUMAR
RESPONDENTS/RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY THE PRINCIPAL SECRETARY TO GOVERNMENT,
DEPARTMENT OF CO-OPERATION, GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM - 695001.
2 JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL)
PATHANAMTHITTA DISTRICT - 689645.
3 ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL)
ADOOR, PATHANAMTHITTA DISTRICT - 691523.
4 PAZHAKULAM SERVICE CO-OPERATIVE BANK LTD.
NO.PT 64, PAZHAKKULAM, MELOODU P.O., ADOOR, PATHANAMTHITTA
DISTRICT - 691554, REPRESENTED BY ITS SECRETARY.
BY ADVS.
JOHN CHERIAN
K.SHAJ
K.JAJU BABU (SR.)(K/116/1981)
THIS WRIT APPEAL HAVING COME UP FOR HEARING ON 15.02.2024, ALONG
WITH WA.595/2021, THE COURT ON 29.02.2024 DELIVERED THE FOLLOWING:
WA NO. 595 OF 2021 and conctd. case
4
JUDGMENT
Amit Rawal, J.
1. Appellants, erstwhile members of the Managing
committee of Pazhakulam Service Co-operative Bank Ltd., and
former Secretary of the Bank had challenged the order of the
Joint Registrar of Co-operative Societies, passed under
Section 68 of the Kerala Co-operative Societies Act, 1969 and
on dismissal of the appeal dated 31.5.2018 preferred writ
petition Nos. 20911 and 22340 of 2018. Both the writ
petitions have been dismissed. It is in this background, two
intra court appeals have been filed.
2. Before dealing with the facts of the case, three (3)
provisions of the 1969 Act for surcharging the members of the
Committee or the Secretary are required to be extracted ie.,
Section 65, 66, 68 and Rule 66.
65.Inquiry by the Registrar.-(1)The Registrar may,-
(a)on his own motion; or
(b)on an inquiry report of the Vigilance Officer appointed
under section 68A; or
(c) on a report of the Director of Co-operative Audit appointed
under section 63; or
(d)on an application by the majority of the members of the
WA NO. 595 OF 2021 and conctd. case
committee of the society, or by not less than one third of the
quorum for the general body meeting, whichever is less; or
(e)on an application by the apex society or financing bank of
which such society is a member; or
(f)on an application of a society to which the society concerned
is affiliated; hold an enquiry by himself or by a person
authorized by order in writing, into the constitution, working
and financial condition of the society, if he is satisfied that it is
necessary so to do.
(2)The Registrar or the person authorized by him under sub-
section
(1) shall, for the purpose of an inquiry under this section, have
the following powers, namely:-
(a)he shall, at all reasonable times, have free access to the
books,accounts, documents, securities, cash and other
properties belonging to, or in the custody of the society and
may summon any person in possession of or responsible for
the custody of any such books, accounts, documents,
securities, cash or other properties, to produce the same at
any place at the headquarters of the society or at any branch
thereof or where there is no working office for the society, at
the office of the Registrar or at the office of any of his
subordinate officers;
(b)he may summon any person who, he has reason to believe,
has knowledge of any of the affairs of the society, to appear
before him at any place at the headquarters of the society or
any branch thereof and may examine such person on oath; and
(c) (i) he may, notwithstanding any rule or bye-law specifying
the period of notice for a general body meeting of the society,
himself call a general body meeting or require the President or
Secretary of the society to call a general body meeting at such
time and place at the headquarters of the society or any
branch thereof, to determine such matters as may be directed
by him;
(ii)any meeting called under sub-clause (i), shall have all the
powers of a general body meeting called under the bye-laws of
the society.
(3)When an inquiry is made under this section, the Registrar
may communicate the result of the inquiry to the financing
bank, if any, to the society to which such society is affiliated
and to the Circle Co-operative Union.
(4)When an inquiry made under this section reveals only minor
defects which, in the opinion of the Registrar, can be remedied
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by the society, he shall communicate the result of the inquiry
to the society and the society, if any, to which that society is
affiliated. He shall also direct the society or its officers to take
such action within the time specified therein to rectify the
defects disclosed in such inquiry.
(5)The inquiry under this section shall be completed within a
period of six months 56[which period may at the discretion of
the Registrar and for reasons to be recorded in writing, be
extended from time to time, so however that the aggregate
period shall not in any way, exceed one year.]
(6)If the Registrar, on completion of the inquiry finds that
there is a major defect in the constitution or working or
financial condition of the society, he may initiate action in
accordance with the provisions of section 32.
66.Supervision and Inspection.- (1) The Registrar shall
supervise or
cause to be supervised by a person authorised by him by
general or special order in writing in this behalf, the working
of every society as frequently, as he may consider necessary.
The supervision under this sub-section may include an
inspection of the books of the society.
(2)The Registrar may, on his own motion, or on the application
of a creditor of a society, inspect or direct any person
authorized by him, by order in writing in this behalf, to inspect
the books of the society:
Provided that no such inspection shall be made on the
application
of a creditor unless the applicant,-
(a)satisfies the Registrar that the debt is a sum then due and
that he has demanded payment thereof and has not received
satisfaction within a reasonable time; and
(b)deposits with the Registrar such a sum as security for the
costs of the proposed inspection as the Registrar may require.
(3)Where the inspection under sub-section (2) is made on the
application of a creditor, the Registrar shall communicate the
result of such inspection to such creditor.
57a[(4)The Registrar or any person authorised by the
Registrar
under sub-section (1) or sub- section (2) shall at all reasonable
time have free access to and have power to inspect the books,
records, accounts, documents, securities, cash balance and
WA NO. 595 OF 2021 and conctd. case
other properties belonging to the society and may summon any
person in possession of or responsible for the custody of such
books, records, accounts , documents, securities, cash balance
and other properties, to produce the same for inspection at
any place at the Headquarters of the society or any branch
thereof or where there is no working office for the society, at
the office of the Registrar or at the office of any of his
subordinate officers.
(4A)It shall be the duty of every officer and employee of the
society to co-operate with and assist in such supervision or
inspection, to furnish any information that may be required for
the purpose and to produce the books, records, cash balance
etc. referred to in subsection (4), on demand by such officer,
failing which it shall be treated an offence under sub section
(4) of section 94].
(5)The Registrar or the person authorized by him under sub-
section (1) or sub-section (2) may, by order in writing, direct
the society or its officers to take such action, as may be
specified in such order, within the time that may be mentioned
in such order.
(6)The Circle Co-operative Union shall have the power to
direct that a non-official member thereof shall be present at an
inspection under sub- section (2):
Provided that such non-official member shall not have the
power to make the inspection himself.
(7)Apex Society or Federal Co-operative Society or a financing
bank shall have the right to inspect the books of any registered
society which is affiliated to it, through its officers.
(8)An officer of an Apex Society or Federal Co-operative
Society or a financing bank, inspecting the books of a society
shall at all reasonable times have the access to the books,
accounts, documents, securities, cash and other properties
belonging to the society and may call for such information,
statements and return, as may be necessary to ascertain the
financial condition of the society and the safety of the sums
lent to it.
(9)An officer referred to in sub-section (8) shall also have
power to summon any person in possession of or responsible
for the custody of any books, accounts, documents, securities,
cash and other properties, referred to in that sub-section to
produce the same for inspection or verification at any place at
the headquarters of the society or any branch thereof.
(10)Apex Society or Federal Co-operative Society or the
financing bank may also report to the Registrar about the
WA NO. 595 OF 2021 and conctd. case
action to be taken against the society, as a result of the
inspection by tits officers.
57b[(11)Notwithstanding anything contained in sub section (1)
and (2) above, the Registrar or his subordinate officers
authorized by him under sub section (1) shall have power to
hold an enquiry with necessary records of a society, on any
petition received, and to inspect the affairs of the society
periodically, in such cases, the inspecting officers shall have
same powers as specified in sub section (4).
Explanation I- The "affairs of a society" for the purpose of this
sub section includes, among other things, matters relating to
administration, management and the business of a society.
Explanation II- The duty of the officers and chief executive of
a society and the nature of offences and penalties mentioned
in 57[sub section (4A)] shall be applicable to this sub section
also.
68.Surcharge.- (1) If in the course of an audit, inquiry,
inspection or the winding up of a society, it is found that any
person, who is or was entrusted with the organization or
management of such society or who is or has, at any time been
an officer or an employee of the society, has made any
payment contrary to the Act and the rules or the bye-laws, or
has caused any loss or damage in the assets of the society by
breach of trust, or wilful negligence or mismanagement or has
misappropriated or fraudulently retained any money or other
property belonging to such society or has destroyed or caused
the
destruction of the records, the Registrar may, of his own
motion or on the application of the committee, liquidator or
any creditor, inquire himself or direct any person authorised
by him by an order in writing in this behalf, to inquire into the
conduct of such person.
(2) Where an inquiry is made under sub-section (1), the
Registrar may, after giving the person concerned, an
opportunity of being heard, by order in writing, require him to
repay or restore the money or other property or any part
thereof, with interest at such rate, or to pay contribution and
costs or compensation to such extent, as the Registrar may
consider just and equitable.
60[(3)Where the money, property, interest, cost or
compensation is
not repaid or restored as per sub-section (2), the Registrar
shall take urgent steps to recover such amounts from the
WA NO. 595 OF 2021 and conctd. case
concerned persons as arrears of public revenue due on land as
specified in Section 79 of the Act.]
3. The procedure prescribed therein is required to be
followed for the purpose of 'enquiry' or 'inspection' by the
Joint Registrar. The Joint Registrar invoked the provisions of
Section 66 of the Act by ordering an inspection on various
issues which consisted of irregularities in conducing the home
appliances Mela in the year 2010-13 and the amounts spent by
the Society for construction of the 1st floor of the building
where the Bank was functioning over and above the amount
authorized.
4. The inspecting officer on 21.3.2016 inspected the
books, records, documents for differential financial year viz-a-
viz the loan fair held in 2011-12, deficiency of stock,
manipulation of the bills, non production of the bills by an
agency alleged to have sold to the Society and the
proceedings authorizing Mr.K.Prasanna Kumar, a permanent
staff for conducting Home Appliances Mela in 2012-13. The
inspection conducted by the Registrar through the Assistant
Registrar submitted a reported dated 17.3.2017.
WA NO. 595 OF 2021 and conctd. case
5. On receipt of the aforementioned inspection, the
Joint Registrar vide order dated 22.3.2017 ordered an enquiry
under Section 68(1) of the Act.
6. A notice was issued to the affected parties and their
statements were recorded on 5.5.2016. An explanation was
also submitted on 12.5.2016. On perusal of the enquiry vide
order dated 16.9.2017 an order under Section 68(2) of the Act
was passed whereby the appellants, petitioners were
'surcharged'. The aforementioned order, as per the
provisions of Section 83(e) of 1969 was passed challenged by
preferring appeal to the Government. Vide order dated
31.5.2018, appeal was dismissed. Learned Single Bench
noticing all the rival contentions, dismissed the writ petition.
7. Learned counsel for the appellants in support of the
memorandum of appeal raised numerous submissions. On
plain and simple perusal of the provisions, while surcharging
the petitioners liability has to individually apportioned and not
collectively. In support of the contentions, relied upon
judgment of the Single Bench of this Court in 2023 KHC online
9450 (Vincent Y.R v. Joint Registrar of Co-operative Societies).
WA NO. 595 OF 2021 and conctd. case
Learned Single Judge failed to appreciate report dated
17.3.2017 and 15.6.2017. The explanation from the
committee members while finalizing the report was not
confronted. The inquiry officer arbitrarily dug into the
veracity of the bills available with the Society and collected
other bills from the same agency without confronting with the
petitioners, appellants, therefore, the erroneous difference of
Rs.3,39,098/- was an imaginative figure. It was specifically
apprised that the entire record of the Society for the particular
period was audited by the auditors and no loss was found. In
fact the Society was actually earning a profit by conducting
Mela. The purchase of the material was reflected in the stock
register.
8. Through the resolution, it was substantiated that the
Bank had not conducted any Mela for the year 2012-13. The
Mela was conducted by an agency called Blue Moon Agencies,
at the place, on their own only. The said agency conducted
Mela by bringing Home Appliances by themselves for the
purpose of sale. The Society actually facilitated the members
for purchases from that Mela raising loans from the Society.
WA NO. 595 OF 2021 and conctd. case
The then Secretary had remitted certain amount to be
considered as a admission of guilt is also perverse and illegal.
Another irregularity noted in the inspection happened only
because of an oversight to make necessary entries in the
relevant records. Another case is relied on this point in A.K
Francis v. Joint Registrar (1990 KHC 411) .
9. On the other hand, learned counsel for the
respondent supported the findings rendered by the Single
Bench and submitted that the inspection report under Section
66(2) was submitted by the Assistant Registrar General, Adoor
which found that without permission from the department,
against the provisions of the byelaws of the Bank and without
approval of the General body of the Society, Home Appliances
Mela was conducted. The mismanagement, misappropriation
and fraud by the Secretary and previous managing committee
caused a loss of Rs.3,39,098/-. There was a difference of the
aforementioned amount between the invoices submitted by
the bank before the inspecting officer and the bills issued
subsequently by the agency. The invoices submitted by the
bank before the inspecting officer did not contain any sale tax
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details and TIN number etc. On the request of the inspecting
officer the agency submitted the detailed invoice of
Rs.13,79,900/-. The bank submitted invoices of Rs.17,18,998/-.
No explanation had come with regard to Rs.3,39,098/-.
Agency during the inspection submitted that they were
supplying home appliances to the Society and in lieu thereof
received an amount of Rs.15,46,299/-. Managing Committee
framed a resolution for conducting the home appliances Mela
in the year 2012-13 dated 7.7.2012. There was a manipulation
with regard to resolution No.833 dated 27.8.2012. In support
of the contentions relied upon the judgment of the Full Bench
of this Court in Kudayathoor Service Co-operative Bank Ltd. v.
Joint Registrar of Co-operative Societies (2022 (3) KLT 222
(F.B)] to contend that the principle of reasonable opportunity
of hearing has to be applied to the extent and the stage to be
done by keeping in mind the express language and basic
scheme of the provisions conferring the power of its nature
and purpose. Section 32 and 68 of the Act does not
contemplate on the part of the Registrar to afford an
opportunity of hearing as per the acceptability or otherwise of
the report of the inspection, before initiating the proceedings.
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10. We have heard the learned counsel for the parties
and appraised the paperbook. The extracted provisions of the
Act is complete code which came to be adjudicated for the
purpose of affording an opportunity of hearing in the judgment
in Kudayathoor, supra. The opportunity of hearing was
provided under Rule 66(5) of the Rules r/w Section 65 and 66
pertaining to enquiry, inspection to be apportioned among the
parties mentioned under Section 67 only. Para 15 and 16 of
the judgment reads as under:
15. True, it is seen that a contrary view has been taken by
a learned Single Judge in Thiruvalla East Co- operative Bank
Ltd and the said decision has not been taken note of in
Aravindakshan Nair and the view in the said case has been
followed by the very same learned Judge while sitting in
Division in W.A.Nos.2196 and 2198 of 2012. A reading of
the judgment in W.A.Nos.2196 and 2198 of 2012 would
show that the learned Judges in the Bench were proceeding
as if the opportunity of being heard provided for in Rule
66(5) applies to every action to be taken by the Registrar
pursuant to the report of inquiry or inspection without
considering the scope of the Rule. But, in Thiruvalla East
Co-operative Bank Ltd., the learned Judge has considered
the scope of the Rule. Paragraph 12 of the judgment in the
said case reads thus:
"12. Counsel for the 3rd respondent contended that the
hearing contemplated under R.66(5) of the Rules is only on
the recommendation of the Registrar about the manner in
which the cost of the enquiry or a part thereof is to be
apportioned. In my view, there is no warrant for such a
restricted reading of this provision. As is evident from the
Rules, apportionment of costs can only be in respect of an
enquiry held at the instance of a creditor. In such a case,
S.67 of the Act contains provision for apportionment and
also for hearing, before anybody is made liable for costs. In
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such a situation, there is no necessity for any further
provision of the Rules and this also strengthen the view that
the hearing provided in R.66(5) of the Rules is not confined
to apportionment of costs. For these reasons, I am not
inclined to accept this contention of the counsel for the
respondents."
As evident from the extracted paragraph, the view taken is
that since Section 67 provides for apportionment of costs
after hearing the parties concerned, there is no necessity
for a hearing on the said aspect in terms of Rule 66(5) as
well and the opportunity of being heard provided for in the
Rule is, therefore, only in respect of matters other than the
matter relating to apportionment of costs. We are unable to
agree. Section 67, of course, provides that where an inquiry
is held under Section 65 or inspection is held under Section
66 on the application of a creditor, the Registrar may, by
order, apportion the costs or such portion of the costs, as he
may deem fit, between the society to which the society
concerned is affiliated, the society, the member or creditor
demanding an inquiry or inspection, and the officers or
former officers of the society. But, what is provided for in
Rule 66(5) is a recommendation by the officer authorised to
conduct the inquiry or inspection as regards the manner in
which the costs or part thereof is to be apportioned among
the parties mentioned in Section 67. In other words, the
opportunity of hearing provided for under the Rule can only
be with regard to the recommendation made by the officer
conducting the inquiry or inspection as regards the manner
in which the costs or part thereof of inquiry or inspection is
to be apportioned amongst the parties mentioned in Section
67. Although it would appear that the manner in which the
costs of inquiry or inspection is to be apportioned amongst
the parties mentioned in Section 67 would fall within the
scope of power of the Registrar under that provision, since
Rule 66(5) provides for a recommendation as regards the
manner of apportionment of costs also and the Rule being
supplementary to the statutory provision, a harmonious
construction of the two provisions would only lead to the
inference that the power under Section 67 is one to be
exercised in the manner provided for in the Rules.
16. Let us now consider the contention of the learned Senior
Counsel Sri.George Poonthottam that insofar as the further
actions provided for under the Act pursuant to the report of
inquiry or inspection is either the supersession of the
committee of the Society in terms of Section 32 or
surcharge against the members of the Managing Committee
and others in terms of Section 68 involving drastic
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consequences as far as the parties are concerned, in the
absence of any provision in the Act or Rules for providing to
the parties concerned a copy of the report of inquiry or
inspection and for hearing them on the acceptability of the
same, an opportunity of hearing should be read into the
statute before the report is acted upon. There are two
approaches possible to deal with this contention. One is to
hold that the provisions of the Act are themselves
unconstitutional as they do not provide an opportunity of
hearing to the affected parties as to the acceptability of the
report of inquiry or inspection, and the other is to hold that
as there is nothing in the statutory provisions which debar
the application of the principles of natural justice while the
authorities exercise the statutory powers under the Act and
as the principles of natural justice would apply unless the
statutory provisions point to the contrary, it is obligatory for
the statutory authorities to afford an opportunity of being
heard to the parties concerned before an action affecting
their rights adversely is taken. Insofar as the parties who
oppose the view taken in Aravindakshan Nair do not have a
case that the provisions in the Act are unconstitutional
inasmuch as they do not provide an opportunity of hearing
for the affected parties on the acceptability or otherwise of
the report of inquiry or inspection, what was pressed into
service by them by raising the above contention was the
second approach mentioned above. The said approach could
be adopted and "audi alteram partem" rule could be
imported into a statute in a situation of this nature only if
the nature of the statutory duty imposed itself necessarily
implies an obligation to hear before deciding on an issue.
The said aspect has been clarified by the Apex Court in
Government of Mysore v. J.V.Bhat, (1975) 1 SCC
110. Paragraph 8 of the judgment in the said case reads
thus:
"We think that the Electricity Commissioners' case (supra)
which was followed by this Court in Khushaldas S. Advani's
case (supra), was not really a departure from the general
principle laid down in Cooper v. The Board of Works for the
Wandsworth District (supra), but, it was an attempt to
formulate the conditions under which the general principle
laid down thereby Erle, C.J., who quoted the Biblical story of
how even God Himself had given Adam an opportunity of
answering why he had eaten the forbidden fruit before,
expelling him from Paradises was applicable in the
circumstances of an increasingly complex economic and
social order whose problems compelled the emergence of
the welfare socialistic State with its many organs armed
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with extensive powers. Courts attempted, in the interests of
justice, where its imperative demands were not met, to
control administrative action by assimilating it to judicial
action over which Courts could exercise supervision. In later
cases, emphasis was more on the needs of justice and
fairness rather than upon the distinction between the
judicial and administrative action. Administrative action
had, however, to be given free scope within its legitimate
sphere without jeopardizing rights of individuals affected.
Policies and schemes framed under statutory provisions,
which affected rights of individuals could impose the
obligations upon the authorities taking what were
essentially administrative decisions at points at which they
begin to impinge on specific individual rights. It is only
where there is nothing in the statute to actually prohibit the
giving of an opportunity to be heard, but, on the other hand,
the nature of the statutory duty imposed itself necessarily
implied an obligation to hear before deciding that the "audi
alteram partem" rule could be imported. The nature of the
hearing would, of course, vary according to the nature of
the function and what its just and fair exercise required in
the context of rights affected."
(underline supplied) The question therefore is as to whether
the nature of the statutory duty imposed on the Registrar
implies necessarily an obligation to afford to the parties
concerned an opportunity of being heard on the
acceptability or otherwise of the report of inquiry or
inspection before a tentative decision is taken as to the
further action pursuant to the report.
11. The records as per the inspection, enquiry and
findings of the Single Bench reveal that the inspecting officer
had in fact issued a notice to the Managing Committee on
5.5.2016. Both the Managing committee and Secretary
submitted explanation on 12.5.2016. Even pursuant to the
notice under Section 68 of the Act, appellants, petitioners filed
objections. Therefore the argument that no opportunity was
WA NO. 595 OF 2021 and conctd. case
granted does not merit any acceptance.
12. The invoices Ext.R2(b) and (c) reveals that there was
a difference of Rs.3,39,098/-. There is a variation of the
amount viz-a-viz the invoices received from the agency and
submitted by the Society. The invoices of the Society did not
have any TIN or GST number. No plausible explanation or
document have been placed on record in support of the
contentions to belie such allegations.
13. The story coined in defence with regard to holding of
the Mela by an agency was also found to be not any substance,
for, vide resolution No.833 authorized one person to hold the
loan fair. In other words there is no resolution authorizing to
hold such fair. Prasannakumar had also lodged a complaint
dated 7.6.2013 regarding non entry of the goods purchased
from agencies.
14. The contention that the accounts were audited way
back and the proceedings were initiated after the laps of four
years is also neither here and there, for, the authorized
expenses of the construction of the building was Rs.1,75,011/-
WA NO. 595 OF 2021 and conctd. case
for the year 2011-2012 and Rs.1,27,173 for the year 2012-
2013 and was found to be due to the Society under the head
of the purchase advance. It cannot be termed to be a minor
mismanagement or supervisory lapses.
15. Rule 47 of the Co-operative Societies Rules
envisages that notwithstanding anything contained in the
clauses, the committee of the society shall primarily be
responsible for the maintenance and safety of all accounts,
records, cash and other assets of the Society. In the cited
judgments, the order of recovery was proceeded on the basis
the liability of dead person was attempted to be fastened on
the existing members. The case in hand is of not such kind.
Whatever the liability had been arrived at, is proportionately
attributed to the members and the Secretary. There is no
merit. No ground for interference is made out. Writ appeals
are dismissed. SD/-
AMIT RAWAL , JUDGE
SD/-
sab C.S. SUDHA, JUDGE
